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Does green still resonate with procurement officers and IT managers?

Apple's decision to withdraw from EPEAT raises interesting questions, starting with the question of consumer interest in Green products?

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This is an interesting period for the environment and for the broad concept of sustainability. The industry continues to push for efficiencies on the environmental front, but there seems to be a lesser sense of urgency as much as it used to be pre-2008 financial crisis. 

When discussing with us their sourcing and purchasing needs, Procurement Officers and IT Managers have been recently less keen on focusing on Green IT metrics but much more on dollars and compliance. Although given the broad economic and regulator contexts, their positions may make sense, we continue to insist that Green IT is also about cost containment and compliance.

Though there were many cases, one particular event this year caught our attention and that is the decision of Apple in early July 2012 to withdraw from the Electronic Product Environmental Assessment Tool (EPEAT) and delist 39 of its products from that environmental-focused certification. But in a matter of 24 hours, Apple reversed its  decision, citing customer feedback as one of the key reasons for a return to EPEAT.

Apple's first decision to withdraw from EPEAT raises interesting questions, starting with the question of consumer interest in Green products?  For Apple to make such decision at first, it may have concluded that environmental attributes may not resonate as strongly among its buyers and therefore there was no need to comply with such "certification" tools, adding complexity and cost to its business. 

I speculate that part of Apple's possible argument may be correct, but not always. Indeed, among the first to react negatively were public sector buyers, the very same types of customers that EPEAT was designed for. EPEAT was established by President George W. Bush to require most Federal agencies to buy PCs using EPEAT environmental standards. Those standards have not fully migrated to the broad enterprise and consumer markets the way  Energy Star did, but they have clearly penetrated deeply into the Public Sector markets. 

The first to react was the City of San Francisco, which threatened to remove Apple from its supplier list. Other public entities were about to follow the same path as San Francisco, with the potential risk for Apple to lose its competitive edge in the very critical education market. And so while the average buyers in Apple stores may not be so actively focused on power consumption per-se, Public Sector buyers know EPEAT very well and want OEMs to abide by it, hence Apple's resumption of its relationship with EPEAT.

Just like the average consumer, within the US enterprises,  procurement officers and IT managers have been less vocal about Green IT than in the past and are much more concerned about other factors. From early 2000 to 2008, the Green IT debate included very active purchasing and IT management organizations, focused on power consumption reduction strategies as the cost of energy reached its peak in 2003.

Their attention extended to IT lifecycle management, all the way down to hardware recycling as climate change created new sense of urgency, magnified by destruction brought by Hurricane Katrina and the Tsunamis in Asia. The 2008 financial crisis and subsequent recession led to an abrupt halt in the Green IT debate. Companies re-focused their resources on survival and continuity and the Green agenda was set aside for the time being.

Discussing this very topic, my colleague Kimberly Knickle, Practice Director, IT Priorities & Strategies at IDC Manufacturing Insights  provides a solid argument as to why the topic of Green among buyers is less prominent these days than in pre-2008. In her assessment, IT users take it somewhat for granted that environmental metrics are now embedded into OEM and supplier designs and strategies.  In other words designing products and systems that incorporate environmental improvements has shifted from consumer and user debate to implementation at the OEM and supplier level. And that argument has a lot of solid backing.

Indeed, technology leaders  and their partners in the channels and on the supply chain front have been active improving their products and processes, taking into account energy consumption reduction while being active on the recycling front to control the flow of hardware moving into the recycling downstream.  Examples of such initiatives abound, from OEMs pledging billions of pounds of products they would recycle, to new products improvements that promise substantial power savings.  

On the PC client side, Microsoft's Windows 7, for example, comes with power management options in the OS settings that allow users to save on electricity through simple steps involving the battery, the display and other power-consuming components.  These power options are available in addition to what Intel provides in terms of energy savings capability.

That includes building efficient systems around the process platforms that take into account the power supply units, the hard drives, the memory and graphics module integration.  Studies disclosed by Intel reveal that from 2003, when the debate over Green IT intensified and 2011, system performance increased by more than three times, while power consumption dropped by a third. 

Also this is no surprise that the majority of PCs these days are Energy Star certified. With Windows 8 on its way into the market, further substantial improvements are expected, including on the hardware front as we move into more low-power processors and systems feeding into the so-called "multi-client per device" environment. The same is to be said in the data center.

On the recycling front, while there is no federal legislation per se, OEMs and retailers have been competing with each others with pledges to collect billions of pounds of electronics for the purpose of recycling. While it is true that State laws require them to be active players in recycling, they are nevertheless working to beat their own targets, regardless of consumer perception.

Yet, data suggest for procurement executives and IT managers, the environment is not one of the components that keeps them awake at night. An IDC survey of procurement and IT managers conducted in 1Q12 demonstrates that when dealing with IT hardware recycling,  organisations are primarily concerned about compliance on data security and on cost containment. 

Broadly these two factors have an equal priority for all organisations combined, though the priority is slightly greater on the cost containment front for mid-size and small entities, and data security compliance for larger organisations. Prior to 2008, similar surveys positioned "environmental stewardship" very close to the two current factors, if not tied with them.

So what does that all mean for procurement and IT managers? Although the debate has eased, it is critical important to reignite the Green IT priority in the organisation. This is not only because there are environmental implications related to corporate pledges and CSR policies, but closer to cost containment, being environmental on the IT side means greater opportunities to reduce cost. 

The very same fundamentals that led to the Great Green debate pre-2008 still remain very valid. Energy cost is high and will remain so, and recycling practices remain opaque and suffer from lack of transparency. Continuing to use environmental metrics and proper assessments are recommended. Only this way could the best IT companies emerge!

Posted by David Daoud, Analyst, IDC
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